2012 D e c i sion s O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit

1-30-2012 

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P r e c e de n t i al or N on-P r e c e de n t i al : N on-P r e c e de n t i al
D ock e t N o . 10-4086

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w . v i l l a no v a . e du/thir dc ir c uit_2012/15141 NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

_______________ No. 10

- 4086

_______________ GARY STRAUSSER; STRAUSSER ENTERPRISES INC.

v. TOWNSHIP OF FORKS; KARL KLINE, Esquire; DAVID L. HOWELL

_______________ On Appeal from th e United States District Court F or the Eastern District of Pennsylvania (D.C. C ivi l Action No. 5

- 0 9

- c v - 05859 ) District Judge: Honorable Mitchell S. Goldberg

_______________ Submitted Under Third Circuit LAR 34.1(a)

January 23, 2012

_______________ Before: AMBRO , CHAGARES and HARDIMAN , Circuit Judges

(Opinion filed : January 30, 2012)

_______________ OPINION

_______________ AMBRO, Circuit Judge Gary Strausser and Strausser Enterprises Inc. (“SEI”) appeal the District Court‟s
order staying their suit against the Township of Forks, Karl Kline, and David L. Howell , pending th e resolution of related state

- court litigation

. B ecause the District Court‟s stay2

order is not a “final decision[]” under 28 U.S.C. § 1291 and is not otherwise appealable ,

w e dismiss for lack of appellate jurisdiction

. I. Because we write solely for the parties, we set fort h only those facts necessary to our decision

. In 2000, the Township of Forks , Pennsylvania, tentatively approved SEI ‟s
p lans for the construction of a reside ntial real estate development

. T hings , however, went south. T he Township and SEI are now caught in a thicket of litigation.
In 2007 , SEI sued Forks in the Pennsylvania Court of Common Pleas, alleging that the Townsh ip attem pted to overcharge it for hundreds of thousands of dollars in inspectio n, engineering , and legal fees. See Strausser Enters., Inc. v. Tw p . of Forks, No. C0048CV2007

- 005131 (Pa. Ct. Com. Pl.) (the “Fee Case”). The parties submitted the case to arb itrati on and the amount due to Forks was greatly reduced

. After SEI filed the Fee Case, Forks filed t h ree lawsuits of its own against SEI

. In its first suit, Forks alleged that it owned eight maple trees SEI had removed near the edge of the planned deve lopment and that the trees‟ removal violated the Township‟s planned residential development ( “ PRD ” ) zoning ordinance

. See Twp. of Forks v. Strausser, No. C0048

- CV

- 2007

- 8272 (Pa. Ct. Com. Pl.) (the “Tree Case”). The Court of Common Pleas has since granted SEI summary judgment in the Tree Case

. SEI also filed a counterclaim
in that proceeding for abusive litigation , among oth er things , but t he Court of Common Pleas dismissed it. T wo weeks after SEI filed its counterclaim, Forks sued SEI a second time , dem anding that it replenish certain escrow accounts. Twp. o f Forks v. Strausser Enters., Inc., No. C0048CV2009

- l0928 (Pa. Ct. Com. Pl.) (the “Escrow Case”). That3

same day, Forks filed its third lawsuit against SEI. See Twp. of Forks v. Strausser, No. C004 8CV2009

- 10929 (Pa. Ct. Com. Pl.) (the “PRD Case”). In that action , Forks sought a declaratory judgment that SEI‟s rights to certain phases of the development were permanently terminated or forfeited. SEI claims that the Tree Case, the Escrow Case, and th e PRD Case are baseless and nothing more than retaliation for its filing the Fee Case and a counterclaim in the Tree Case.
SEI also asserts that Forks has retaliated against it in ways other than the
pr osecution of baseless litigation , including “ the pub lication of false accusations of criminal, immoral and horrific conduct, and attempts to delay, frustrate and ultimately terminate [its] development rights.” SEI Br. at 4. For example, according to SEI, Forks improperly refuses to release funds from a let ter of credit

. SEI also claims that Forks has added substantial, punitive conditions to the development‟s final plans that were not i ncluded in the tentative plans. According to SEI, Forks changed its curb specifications, added construction of a drainage swale, and demanded t hat a road be widened. Forks also restricted the issuance of permits for Phase 7 of the development. This restriction, says SEI, prevented it from selling Phase 7 to another developer for $8 million. SEI had previously sold other p hases of the development t o other real estate developers.
SEI filed the fifth suit in this saga in federal court. The complaint makes two claims against Forks, Kline (Forks‟s Solicitor) , and Howell (Chairman of Forks‟s Board of Supervisors) under 4 2 U.S.C. § 1983: (1) retaliation against SEI for engaging in protected conduct under the First Amendment ( i.e. , filing the Fee Case and the counterclaim in the Tree Case) , and (2) deprivation of SEI‟s right to the equal protection4

of the law. It also ass erts two common law claims against Kline and Howell: (1) abuse of process , and (2) malicious prosecution. The District Court stayed the federal proceedings “until the resolution of the underlying state court proceedings so that [the Court] can determine whether the [d]efendants are entitled to Noerr

- Pennington immunity.” The Court explained : In a § 1983 action, a public entity is protected from liability pursuant to Noerr

- Pennington for filing a lawsuit as long as the public entity is authorized by sta te law to file that lawsuit. Schneck v. Saucon Valley Sch. Dist. , 340 F. Supp. 2d 558, 573 (E.D. Pa. 2004) (citations omitted). A public entity can only be liable for the filing of such a lawsuit if it was both objectively baseless and subjectively inten ded to abuse the process. Id. at 574. Therefore, given the pendency of the underlying state civil litigation and its direct correlation to potential Noerr

- Pennington immunity, a stay will provide all parties an opportunity to resolve the underlying litig ation and will allow full consideration of all relevant facts and legal issues from those actions as they relate to the above

- captioned action at a later time. The Court ordered SEI‟s counsel to “notify the Court in writing within seven (7) days of
the re solution of all related un derlying state court actions.”
SEI seeks to appeal the propriety of the District Court‟s stay order. At our direction, the parties submitted supplemental briefing on the appealability of the District Court‟s stay order.
II.
Un der 28 U.S.C. § 1291, we have appellate jurisdic tion over “final decisions” of
district court s , “except where a direct review may be had in the Supreme Court

. ” 1

1 We also have app ellate jurisdiction over certain interlocutory orders under 28 U.S.C. § 1292 and the collateral order doctrine announced in Cohen v. Beneficial Indus. Loan Corp. , 337 U.S. 541 (1949). SEI does not argue that the District Court‟s stay order fits eit her of these two categories.5

Whether a decision is “final” depends on its effect. Marcus v. Twp. of Abington , 38 F.3d
1367 , 1370 (3d Cir. 1994) . “ Ordinarily, a final decision will have two effects. First, the decision will fully resolve all claims presented to the district court. Second, after the decision has been issued, there will be nothing further for the district cour t to do.” Aluminum Co. of Am. v. Beazer East, Inc. , 124 F.3d 551, 557 (3d Cir. 1997); see also Catlin v. United States , 324 U.S. 229, 233 (1945) (“A „final decision‟ generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.”). Thus, “there is no final order if claims remain unresolved and their resolution is to occur in the district court.” Aluminum Co. of Am. , 124 F.3d at 557. The “usual rule” is that a st ay order is not a “final decisi on []” under § 1291

. Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 10

- 11 n.11 (1983)

. But, an order that stays a federal court suit pending the resolution of related state

- court litigation is final and appealable if it “amounts to a dism issal of the suit. ” Id. at 10. Such an order is final and appealable if it “surrender[s] jurisdiction of a federal suit to a state court” by “ requir[ing] all or an essential part of the federal sui t to be litigated in a state forum.” Id. at 10 n.11. Ho wever, the order is not final and appealable “merely because it may have the practical effect of allowing a state court to be the first rule on a common issue .” Id. Here, the District Court‟s stay order does not “ amount to a dismissal of the suit.” Id

. at 10. In its federal complaint, SEI alleges that it has been deprived of its rights under the Fir st and Fourteenth Amendme nts . Win or lose in state court, SEI must return to the District Court to resolve these constitutional claims because they are no t included in any6

of the pending state

- court suits

. Those cases involve only issues of substantive Pennsylvania law, such as whether Forks may require SEI to replenish certain escrow accounts and whether SEI‟s rights to certain phases of the development a re terminated or forfeited. Therefore, t he effect of the stay will not dispose of SEI‟s claims nor will it leave nothing for the District Court to do. To be sure, whether SEI prevails in state court will affect the character and scope of the federal lit igation. However, t his is not to suggest , as SEI argues, that the District Court is “requir[ing] all or an essential part of the federal suit to be litigated in a state forum.” Id. at 10 n.11. Instead, the Dis trict Court permissibly allowed “ a state cou rt to be the first rule on a common issue .” Id. If SEI prevails in state court, then the parties may return to District Court to litigate all the factual and legal issues pertaining to SEI‟s
constitutional claims

. But i f SEI does not prevail , then we ca n assume (for present purposes) that SEI will be effectively precluded from proving that the state litigation was objectively baseless . If the state litigation turns out not to be objectively baseless, then Forks can claim Noerr

- Pennington immunity for fi ling and prosecuting the suits

. Nonetheless , as noted above, SEI‟s complaint includes other allegations of retaliatory conduct unrelated to the filing and prosecution of the state lawsuits, allegations that cannot be shielded by Noerr

- Pe n nington . These i nclude SEI‟s allegations that Fork s improperly refused to release funds from SEI‟s letter of credit and improperly added new conditions to the development‟s final plans

. So even if the resolution of the state

- court litigation effectively decides the Noerr

- Pennington question in Forks‟s favor, SEI still7

has a possible path to recovery on its constitutional claims that it may pursue in District
Court

. SEI claims its case is similar to Trent v. Dial Medical of Florida , Inc. , where we held that staying a fed eral negligence action pending resol ution of a related state

- court class action on the issues of duty and breach amounted to a requirement that all or an essential part of the federal suit be litigated in a state forum. 33 F.3d 217, 221 (3d Cir. 1994). W e disagree. Unlike SEI, Trent could not pursue his federal claims absent a favorable outcome in the related state

- court litigation. Id. at 222. We have carefully considered the other cases SEI claims are comparable to its

own , and also find them to b e distinguishable. In Moses H. Cone , t he federal and state proceedings involved the “identical issue of arbitrability.” 460 U.S. at 10. In fact, that issue was the “only substantive issu e present in the federal suit.” Id. The Supreme Court explained th at “a stay of the federal suit pending resolution of the state suit meant that there would be no further litigation in the federal forum; the state court‟s judgment on th e issue would be res judicata.” Id. As a result, the plaintiff was “effectively out of
court [,] ” and the “stay order amount[ed] to a dismissal of the suit.” Id. In contrast, as explained above, resolution of the state suits in SEI‟s case will not resolve or prevent further litigation in federal court. Schall v. Joyce also does not sug gest that the District Court‟s stay o rder is final and appealable. 885 F.2d 101, 102

- 03 (3d Cir. 1989). I n that case , Schall sought to challenge in federal court the constitutionality of Pennsylvania‟s confession of judgment procedures and sought to have a judgment previously entered against her in state court by8

confession marked satisfied

. Id. The district court in that case specifically directed Schall to go to state court to try to have the judgment in question opened or struck. As we explained, th e district court ‟s actions demonstrated a clear surrender of its jurisdiction
to a state forum. Id. at 105. The court had directed Schall to try and obtain an important aspect of the relief sought in her federal complaint in a state forum. Unlike Schall , SEI will not obtain any relief on the constitutional claims raised in its federal complaint in the pending state litigation. The District Court‟s stay order serves only to delay deciding the claims in SEI‟s federal complaint. And “[i]f . . . [a stay] order only serves to delay the federal adjudication, it is not final and not appealable.” Marcus , 38 F.3d at 13 72.
* * * * * For the foregoing reason s , we dismiss for lack of appellate jurisdiction.